Dendreon's curve ball

Why Dendreon stumbled on its launch of Provenge for prostate cancer

By Susan Schaeffer Senior Editor | Aug 8, 2011 | 7:00 AM GMT

During the first year Dendreon Corp.'s Provenge sipuleucel-T was on the market, the biggest concern on management's and investors' minds was how fast the biotech would be able to resolve manufacturing constraints for the autologous cell therapy. It's now apparent that this masked the bigger issue of the speed and rate of uptake among community urologists and oncologists. Thus, more than a year after launch, no one really knows how to estimate sales going forward.

Management last week told investors that uptake during 2Q slowed because physicians have been reluctant to shell out for the drug's $93,000 upfront cost. The company said the main reason isn't the price tag or concern about value for money, but rather physician fears they won't get paid, or that reimbursement would take too long.

The news shocked investors - who slashed $3.6 billion off Dendreon's market cap during the week - because recent reimbursement news had been good, and management had not given any hint it was facing problems(see "Scalded Investors," A7).

While the Centers for Medicare & Medicaid Services (CMS) resolved uncertainty over whether Medicare would reimburse for the drug on March 30 - publishing a proposed decision memo backing Provenge sipuleucel-T for its approved indication: asymptomatic or minimally symptomatic metastatic, castration-resistant prostate cancer (CRPC) - management last week said initial manufacturing constraints hid the effect of reimbursement uncertainty until July.

"I think a fair question to ask is why didn't we see this trend earlier? Keep in mind, for the initial 12 months of our launch we were capacity constrained, and we did not see the real impact of the reimbursement headwinds until after additional capacity was brought on line," President and CEO Mitchell Gold said on a conference call.

"It wasn't until the July revenue was known and the trends for early August orders came in that we realized the growth would be more gradual than we had anticipated," he said.

Once capacity constraints were eased, the company began to broaden its outreach from academic centers to community practices, which treat about 70% of CRPC patients. The smaller, community practices are more sensitive to reimbursement risk, Gold said.

Physicians and reimbursement consultants contacted by BioCentury said it should not have been a surprise that community practitioners would have different constraints than large academic centers, and that companies planning new product launches in that setting